Rising Minimum Wages Take Bite Out Of Restaurants
Written by Scott Blake on December 22, 2011
By Scott Blake
During the holiday season, restaurants in Greater Miami generally are less affected by a slowdown in business than their counterparts in the northern reaches of the state.
The biggest reason: the winter tourism season.
However, the area’s eateries do not escape what the industry’s representatives describe as a statewide burden that rings in the New Year: Florida’s annual minimum wage increase.
And they’re trying to thwart it.
The Florida Restaurant and Lodging Association says it is in discussions with leaders in the Florida Senate and House of Representatives about a possible state constitutional amendment that, if approved, would appear on a statewide ballot.
The goal is to undo Florida’s 2004 voter-approved constitutional amendment that raised the minimum wage and tied future increases, effective Jan. 1 each year, to the Consumer Price Index, which measures cost of living increases.
For 2012, Florida’s minimum wage is scheduled to rise to $7.67 an hour, up 36 cents from $7.31 an hour this year. Likewise, the minimum wage for tipped employees, which includes most restaurant workers, is set to increase to $4.65 an hour, up from $4.29 an hour.
Before the state ballot measure took effect in 2005, the minimum wage in Florida was $5.15 an hour — the federal level at the time. The federal minimum wage has since been raised to $7.25 an hour.
Carol Dover, the restaurant association’s CEO and president, says several years of the annual wage increases, plus other rising costs, are forcing some restaurants to decide between staffing cuts and raising menu prices.
Ms. Dover puts it this way: "What we’re saying to people is "Would you rather have a job? Or do you want to let the minimum wage go up to the point where you lose your job?’"
In a statement, the restaurant association adds: "Businesses can no longer afford to continue to increase the pay of tipped employees who make well over the minimum wage" due to their tips.
For popular spots in Greater Miami’s dining scene, such as Caffe Abbracci at 318 Aragon Ave. in Coral Gables, owner Nino Pernetti says he doesn’t mind the annual mandated pay increases. He says he recognizes the rising costs of living and wants to keep his employees content because it translates into better business.
"A happy employee performs good," says Mr. Pernetti, who employs about 65 people. "That’s how you bank on your business."
On any given day, Caffe Abbracci hosts a mix of businesspeople and local residents, and the occasional celebrity might be spotted — former NBA star Alonzo Mourning stopped by for lunch last week.
Specializing in northern Italian cuisine, the restaurant’s entrees generally range from $24 to $32.
Mr. Pernetti says he has resisted raising prices in recent years, recognizing that consumers are being pressed by the recessive economy. It’s a formula that’s kept his place in business, with repeat customers composing about 90% of his business.
Still, he says he feels the pressure of cost increases, but would rather sacrifice some short-term revenue in order to cultivate steady long-term business.
Not all restaurants, however, can afford that approach.
"Certain pockets of the state are not doing well," Ms. Dover says.
Many eateries in Florida north of Orlando, for instance, reduce their hours or close completely during the holiday season because business slows during the winter.
In addition to the minimum wage, restaurant owners must cope with rising food and food-delivery costs, driven by fuel costs, Ms. Dover says, while trying to hold down menu prices to stay competitive.
"There’s only so much you can charge for a hamburger," she says.
"A 5% increase [in the minimum wage] doesn’t sound like much, but some restaurant chains have said that’s a $1 million hit for them," she adds. "Even for your average restaurants, it can be a $30,000 to $60,000 difference per year."
This isn’t the first time the restaurant association has resisted the minimum wage increase. During the initial campaign for it in Florida in 2004, the association opposed the initiative, but this time there could be one less obstacle in the way.
The Association of Community Organizations for Reform Now, known as ACORN, which organized efforts in Florida to put the minimum wage increases on the state ballot in 2004, has filed for Chapter 7 bankruptcy liquidation.
In recent years, ACORN, which has supported issues for people with low-income and minorities, had become a target of conservatives, who accused the group of misusing federal funds and engaging in widespread voter fraud in relation to its voter registration efforts.
A congressional report eventually cleared the group of wrongdoing, but the "ongoing political onslaught" and "the pressure and cost of defending ourselves in multiple investigations" prompted ACORN to file for bankruptcy, Bertha Lewis, the group’s CEO, says in a statement.
Meanwhile, for many Miami restaurants, it’s business as usual, despite the mandated wage increases.
At Truluck’s at 777 Brickell Ave. in Miami, which offers an "all you can eat" crab plate with side dishes for $69 per person, the restaurant already is seeing a slight uptick in business for the winter season.
"Beginning in January and February, that’s our biggest time, when everybody comes down from up north," says William Salogar, a Truluck’s manager. "Every week lately, we seem to be doing a little bit more business."To read the entire issue of Miami Today online, subscribe to e -Miami Today, an exact digital replica of the printed edition.